Advertisement
Advertisement
Aviation
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
China Aircraft Leasing Group has placed orders for 65 Airbus A320neo aircraft since December. Photo: AFP

China Aircraft Leasing buys another 15 Airbus A320 jets, taking order size to US$7.5 billion

The company is well-placed to take advantage of the boom in China’s air travel demand

Aviation

China Aircraft Leasing Group (CALC) has agreed to buy an additional 15 Airbus A320neo jets on top of the 55 ordered in December, as it increases its fleet to meet the growing demand for air travel in China, which is set to overtake the US as the world’s largest market.

The list price for the 15 single-aisle aircraft is US$1.63 billion, boosting the overall order size to US$7.54 billion, which will be financed through “internal resources and the proceeds from loans or other borrowings”, the company said on Friday.

“A strong order book is one of the most important assets for an aircraft lessor to provide flexible solutions to airlines,” said Mike Poon, chief executive officer of CALC.

“With an expanded fleet and extended global presence, CALC is entering into a new phase of corporate development to increase the aircraft under management.

“We are targeting to deliver at least 40 aircraft per year hence need more aircraft to support the plan.”

The company, on two different occasions in late December, agreed to buy 50 A320neo and five A320-200 CEO (current engine option) aircraft for US$5.42 billion and US$495 million, respectively.

The actual price will be much lower as companies usually negotiate discounts on bulk orders.

China Aircraft Leasing said that Airbus has “granted significant price concessions” but details are subject to confidentiality terms.

The A320neo aircraft will be delivered in stages up to 2023, while the A320-200 will be delivered over the next two years.

“The transaction will significantly expand the group’s fleet portfolio and further solidify its position as the aircraft full-value chain solutions provider,” it said in the December statement.

The above deals have raised China Aircraft Leasing’s total order book to 252 aircraft, with 202 from Airbus and 50 from Boeing.

The aircraft leasing company’s move to grow its fleet size comes as China witnesses a boom in air travel demand.

Shares of China Aircraft Leasing Group rose on news of the company’s latest jet order on Friday. Photo: Reuters

In October, the International Air Transport Association anticipated China would surpass the US as the world’s largest air travel market by 2022, two years sooner than it had previously expected.

In 2017, Boeing also predicted that Chinese airlines would buy more than 7,000 planes worth nearly US$1.1 trillion over the next 20 years amid the country’s booming air travel demand. It also said it would increase production of the single-aisle 737 jets, in part because of demand from countries like China and India.

Shares of China Aircraft Leasing advanced on the Hong Kong market on Friday, rising as much as 1.3 per cent to HK$8.28. By noon, it was trading at HK$8.24, up 0.9 per cent from the previous close.

This article appeared in the South China Morning Post print edition as: firm buys 15 more jets
Post